06/2018: In Search of Better Ways for Puerto Rico

On labor reform and job creation options

Puerto Rico desperately needs new sources of jobs, but the labor reform proposed by the Puerto Rico Federal Oversight and Management Board (FOMB) has not been convincing. By requesting an end to long-standing employee benefits, like Law 80, FOMB intended to align the local labor market with that of the US and allegedly remove what is seen as an impediment for higher labor participation, job creation, and economic recovery, in general. However, the proposed labor reform set forth by FOMB seems to draw a lot from the Bible of the International Monetary Fund (IMF) but misses critical points of the very particular economy of Puerto Rico. In fact, we could wind up in a worse situation. This issue of Pulse analyzes some myths regarding Puerto Rico’s labor market and suggests better alternatives to incentivize jobs in the Island’s labor market.